Legalities or Legal Restrictions of Cryptocurrency in Canada

Canada's government allows its citizens to use digital currencies to transact at all stores that accept them, and it is legal to trade them on exchanges. However, the government does not consider cryptocurrencies as legal tender. The only legal currency in Canada is the Canadian dollar.

The government of Canada classifies cryptocurrencies as commodities rather than legal tender. Thus, trading using crypto is considered a barter transaction, and tax laws apply accordingly. Income from crypto transactions must be reported when filing taxes, and individuals are required to report capital gains or losses from digital currency exchanges. The Canada Revenue Agency (CRA) treats cryptocurrency transactions as either business income or capital gains, depending on the specific circumstances of each case.

Anti-money laundering rules apply to companies that deal with digital currency exchange in Canada, as well as those operating outside Canada that provide services to Canadian parties. These entities must register with FINTRAC (Financial Transactions and Reports Analysis Centre of Canada), maintain detailed transaction records, and report suspicious activities to comply with the Proceeds of Crime (Money Laundering) and Terrorist Financing Act.

Sources:
1. Bank of Canada - Official position on legal tender and Canadian currency issuance
2. Canada Revenue Agency (CRA) - Tax treatment of cryptocurrency transactions and reporting requirements
3. FINTRAC (Financial Transactions and Reports Analysis Centre of Canada) - Regulatory requirements for virtual currency businesses under anti-money laundering legislation